The Economic Impact of Achievement Gaps in Pennsylvania's Public Schools

Size of Academic Performance Gaps in Pennsylvania

• There are sharp race-ethnic differences in Pennsylvania student achievement in eighth-grade reading and math: The share of white students achieving proficiency or above exceeds the share for African-American and Latino students by as much as 24 to 38 percentage points.
• There are equally large differences in student achievement based on family economic status, with gaps in the proficiency rate of 20 to 26 percentage points between students classified as economically disadvantaged (about 40 percent of eighth graders statewide) and those that are not (the remaining 60 percent).
• The gaps in the high school graduation rate among Pennsylvania students are sizeable as well, reaching 17 to 19 percentage points by race-ethnicity and 14 percentage points by family economic status.
• There are also large differences in student achievement based on parent education and wide gaps in performance across school districts.
• Although Pennsylvania is one of the top-scoring states on the 2013 National Assessment of Educational Progress (NAEP) on average, the achievement gaps between students classified by race-ethnicity, economic status, and parent education are among the largest in the country.
• If race-ethnic or socioeconomic achievement gaps were eliminated, average achievement scores for Pennsylvania would match Massachusetts' result (the top-scoring state on the NAEP) and likely place the state among the top scoring-countries internationally.

Economic Impact of Academic Performance Gaps in Pennsylvania

• When subgroups of students do not achieve their full potential in terms of cognitive skills or educational attainment, there is a loss in the aggregate skill or human capital of the workforce and a corresponding shortfall in gross domestic product (GDP). Economic models based on endogenous growth theory posit that skill upgrading will boost GDP growth, with gains that compound over time.
• For the current workforce, race-ethnic academic achievement gaps amount to an estimated annual cost of $1 billion to $3 billion in lost earnings, which equates to 6 to 15 percent of the earnings for African-American and Latino workers.
• If race-ethnic academic achievement gaps had been closed in 2003, the base year, Pennsylvania GDP would have been higher one year later by $1 billion to $2 billion, or 0.2 to 0.4 percent of actual GDP in that year. Ten years after the base year, with the compounded effect on GDP growth, GDP would have been higher in 2013 by $12 billion to $27 billion, or 2 to 4 percent of the value of economic output in that year.
• If student performance gaps based on race-ethnicity or family economic status were closed for future cohorts, each annual cohort in Pennsylvania would gain $3 billion to $5 billion in present-value lifetime compensation and nonmarket benefits. These social gains from closing race-ethnic gaps equate to approximately $83,000 to $125,000 in present-value dollars per African-American and Latino student.